NAA Update

Status of Valassis NSA Postal Rates Elimination of Saturday Delivery

Status of Valassis NSA

NSA Filed with PRC on April 30 Opposition Leads to Extended Review PRC Approves NSA in August (4-1 vote)

The Lone Dissenter

“Too much evidence was presented…by many opponents of this NSA for me to conclude that it would not cause unreasonable harm to the marketplace.”

- Commissioner Tony Hammond

NAA Challenges Decision

NAA Lawsuit Filed on Day of PRC Decision Supported by NNA / Valpak/ Newspaper

Guild Written Briefs in Spring/Oral Argument in May Decision Late Summer Congressional Opposition to NSA Continues

Valassis Introduces Spree

Status of Spree Implementation

Phoenix / Atlanta Test Markets Rob Mason, Valassis CEO (Feb 21):

“It’s a Challenge to Pull Together Package.”

Package Launch Moved to 2nd Q

Questions?

Postal Rates

USPS Listens to NAA / Creates “High Density Plus”No Rate Increase for HDP in 2013 Opens Door for Narrowing Rate GapDialogue on USPS/Newspaper Partnership

Questions?

Questions?

Elimination of Saturday Delivery

USPS Financial Challenges

$15.9B loss in FY 2012 $11.1B Default to U.S. Treasury $15B Borrowing Authority Exhausted Low Cash Flow

Changes to Mail Delivery

Six Days of Package Delivery Five Days of Mail Delivery Mail Delivered to Post Office Boxes Savings = $2B Annually

Impact on Newspapers

Community Newspapers Rely on USPS Opportunity for Daily Newspapers

- Delivery of Magazines/Catalogues - Advertiser Dissatisfaction with

Service Dialogue on Opening Up the Mailbox Negative - USPS Targets Ad Inserts in

Select Markets

Obstacles to Eliminating Saturday Delivery

Congressional Action to Preserve Saturday

USPS Receives $78 Million in Fed. Funding Legislative Rider Requiring 6-Day Delivery USPS – “We Won’t Take the Money”

- Trading $78 Million for $2 Billion- Achieve 6-Day with Package Delivery

Possible OutcomesScenario # 1:

- USPS Ignores Directive from Congress - Eliminates Saturday Delivery on August 5

- Letter Carriers File Lawsuit on Same DayScenario # 2:

- Congress Adopts Postal Legislation - Two-Year Delay Until GAO Studies

Questions?

Questions?